Naked shorting is only legal when done by market makers while making a bona fide market....but yes, it's often been abused, but also, it's also been very misunderstood by a lot of people.
The majority of the so called massive naked shorts have not really been naked at all, it's been funders and insiders shorting against their own paper or convertibles and covering with their own paper or converts...that's a not so naked short and has been very common.
You're right the r/s is not set in stone, but it's the easy way out for the SEC and all concerned so my guess is, it will happen.
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